Need advice on clearing a title with multiple banks out of business...

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Need advice on clearing a title with multiple banks out of business...

Jessie Martin
Berlin, MD · Member since 2013 · 5 posts · 0 votes

I am under contract on a short sale with Chase and have a very tight deadline for settlement mandated by the bank. My title insurance company did a search and came up with 6 open liens on the property, all but two I have been able to prove cleared. One is a tax lien which is in the process of being transferred. The other is a Deed of Trust with 1st Mariner dating back to '99 for 333K - what appears to be the purchase of the property. The current owner refinanced every couple of years and with banks being bought up like crazy the records are a mess. This is what we have determined...The current amount owed to Chase on the property is 800K and strangely they are listed as a second lien to 1st Mariner which makes me certain that there is an error in the records because Chase believes they are first lien-holders. Here is the trail as described by the current owner: 1st Mariner Lien for 333K for purchase of property in '99 was sold to Ocwen which was purchased by GMAC. Before GMAC went out of business the owner refinanced with Washington Mutual who merged with Chase. Unfortunately Chase has as of yet been unwilling to take the time to provide any documentation with regards to these issues (or so we are being told by the sellers REA). My title insurance company is unwilling to do anything further and is just trying to sell us an extra 30K policy to cover the issues.
My question is:
1) Can I contact Chase directly on this matter or will they only talk to the owner and the owners REA?
2) If I can't talk to Chase directly what direction should I go next as our deadline is less then 30 days away?
I know some of you are heros at clearing titles and any advice would be greatly appreciated. Also, please let me know if anything needs clarification and I'll do my best...

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  • Dion DePaoliPro Member
    Real Estate Broker · Northwest Indiana, IN · Member since 2011 · 2k+ posts · 2k+ votes
    13y

    Let me see if I follow your two open liens correctly:

    Chain looks like this:

    $333k Mortgage 1
    1. Borrower to Lender (1st Mariners)
    2. 1st Mariners to Ocwean
    - Should be a satisfied lien

    Ocwean purchased by GMAC. GMAC became Ally. Ally is open and active pretty easy to reach.

    $800k Mortgage 2
    1. Borrower to Washington Mutual
    2. Chase as successor to Washington Mutual
    - Should be the open active 1st lien

    So you have two liens to deal with, I think, if I understand your post correctly.

    For Mortgage 1, you can contact Ocwean directly and see if they will provide a satisfaction. Just because their parental ownership changed does not necessarily mean that the mortgage was assigned to the parent, it can still be satisfied by Ocwean. At the least, they should be able to look up some help at either Ocwean or Ally to help you.

    For Mortgage 2, this should just be requesting a payoff for the lien from Chase. I assume this is pretty easy since it would seem that the borrower is making payments on this mortgage or at least getting Mortgage Servicing correspondence for this lien. So get a mortgage statement or coupon or letter from the Seller/Borrower and get your payoff.

    Both Ally and Ocwean are open for business and you can contact them for help to satisfy the lien as needed. Don't let the parent corp situation blow your mind, still go to the company in name if they are open, they will either direct you properly to the right department or simply take care of themselves.

    If you are in contract with the Borrower/Seller, then you can contact the bank and explain your interest in the property which is you are buying it. They may only want to issue the payoff statement to a closing agent/title company but they still should chat with you. If they don't for some reason, they will certainly talk with your closing agent title company to put out a payoff statement.

    When you contact Ocwean or Ally (start with Ocwean) they may have to go dig up the account and ensure it is not an active account. You may want to be prepared with evidence of the refinance which can be substantiated if the Seller/Borrower has a copy of their HUD 1 from the refinance. This will also help bring to light the closing agent/title company that should have paid the lien off and received and recorded the satisfaction. It might take them a couple days to sort this out, so be patient but be persistent.

    For piece of mind, remember that likely in your purchase contract the Seller has agreed to deliver clear and marketable title. Failure to do so, such as right now in this transaction, is on the Seller not the Buyer so you should not have any EMD risk.

    In the event for some odd reason you can't figure this out and get what you need to clear up title. The Seller/Borrower might have to do a Quiet Title Action to remove the 1st Mortgage lender from title. If that process is too long and the Seller doesn't want go through it, then it might not be a bad idea to think about the additional title coverage. You as the Buyer, purchase the additional coverage then start a QTA on your own so you don't run into problems when you try and sell.

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  • Ned CareyPro Member
    Moderator
    Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
    13y

    When you say

    do you mean Insure an amount of $30K or actually charge you $30K out of pocket. Title insurance is cheap so if you only need an additional $30K of insurance I would do that and move on. Obviously if it is $30K out of pocket that is silly.

    Don gave great advice. I'll add, If the mortgage was paid but never released there are laws regarding that and how you protect/assert your rights. Have you contacted the title company that handled the refinance that paid of the mortgage in question?

    A good title company should be able to clear this up although it is a pain and they may charge extra. That would be "Clear it up" not just charge to insure for the mess. There are a lot of bad lazy title companies.

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  • Jessie Martin
    OP
    Berlin, MD · Member since 2013 · 5 posts · 0 votes
    13y

    They said they can charge us an extra $30K to take liability for the lien with 1st Mariner. Obviously this is not the route we want to go because we are fairly certain that loan is paid off.

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  • Jessie Martin
    OP
    Berlin, MD · Member since 2013 · 5 posts · 0 votes
    13y

    We are in contact with the buyer but he has moved to Thailand and basically has no records for anything that he can put his hands on. The Chase mortgage for 800K is not a problem - that is the loan that will be paid when the sale goes through. We are stuck on the mortgage with 1st Mariner. This is what I found out this morning from accessing property records databases. The mortgage with 1st Mariner for $333K was sold to a company called Residential Funding in 2001. We spoke with Residential Funding and they said they needed a written request to search the records which we submitted twice and they haven't responded. I was able to find a settlement on the property in 2003 where Greenpoint Mortgage Funding paid off a note on the property but there is no record of who was paid off. We believe Greenpoint may have bought the loan from Residential Funding. Greenpoint is no longer around but from what we could determine their records are currently with Capital One. So...we have requests in with Chase, Residential Funding, and Capital One none of whom can give us an idea of when they will get back to us with any information. We have the lieber and folio number for the 1st Mariner lien and the title insurance company is insisting on proof that that lieber and folio is no longer an open lien. I am currently looking for other avenues to pursue to prove that the lien should be released. We did try looking up the previous title insurance company but they too have gone out of business and we have not been able to determine who has their records.

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  • Steve Babiak
    Real Estate Investor · Audubon, PA · Member since 2009 · 13k+ posts · 8k+ votes
    13y

    Perhaps the buyer can identify where the closing of the first refinance was done, and maybe the closing agent can show some documentation that the lien holder of the first was wired funds to cover the debt owed. That would at least confirm your belief that the first should be already satisfied.

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  • Dion DePaoliPro Member
    Real Estate Broker · Northwest Indiana, IN · Member since 2011 · 2k+ posts · 2k+ votes
    13y

    Jessie Martin, it sounds like this is being made a mess.

    This is not that bad really. You have one lien that needs to be dealt with.

    Residential Funding was a division of GMAC. FYI.

    When you say you found a 'settlement' on the property, what exactly do you mean? What did you find and where? We are looking for instruments attached to the real property, a 'settlement' is not an instrument. A mortgage, mortgage satisfaction, assignment of mortgage (or substitute the word 'Lien' for 'Mortgage') are all instruments.

    Mortgage 1 is the lien that needs to be extinguished. As the story goes, the lien was originated and perfected in the name of 1st Mariners. This is the name of the lender on the recorded mortgage.

    Next in title, you want to see who has been assigned this mortgage. There should be an assignment of mortgage which transfer the mortgage from Mariners to Oceawen, even if they are a company successor, since they do not operate under the same name. It's a one or two page document and says Assignment of Mortgage or Assignment of Lien, etc.

    I am not clear what the Greenpoint Mortgage statement means as I mentioned above. Is there a new mortgage recorded with Greenpoint as the Mortgagee?

    If there is not a mortgage with Greenpoint on it, then did you see an Assignment of Mortgage to Greenpoint?

    I am not understanding why you are just calling everyone. Take a breath and spend a moment and write the actual chain of ownership of the mortgage down, line by line. You only need to call the last owner in the chain. Calling or worrying over the other mortgagee's is just a waste of time. They can't help you beyond what you likely already know. The only entity that can satisfy that lien is the last owner of record. The owner of record is determined by the last Assignee located on the last Assignment of Mortgage recorded.

    Chain:

    1. Borrower to 1st Mariner
    2. 1st Mariner to Oceanwen as successor

    The confusing part from your post:

    3. Oceanwen to Greenpoint - ?
    4. Greenpoint to Capital One as successor - ?

    Separate the idea of which mortgage company bought or owns the other. The name on the Assignment is what matters. Do not complicate the story or your course of action by pursuing a successor company if you don't need to.

    If you clean up the post so it is clear, like I am formatting above, I might be able to give you a couple names and numbers to call as I have worked with all of those firms for AOM issues.

    Additionally, the $30k to insure title is wacky. My honest opinion is this is not all that complicated of an issue, so I have to pick on the current title company and agent and say they seem to not want to do the work to clear title. I would seek a different title company. If every time a cloud appeared on title, the title company just said 'Oh Well, just pay $30k....' we would be doing much real estate in the US.

    In order for you to research this you can simply go to public record and see what is recorded or ask the title company to send you the abstract for the title commitment and the supporting documentation. I would pull the mortgage and assignments out and stack them in chronological order.

    When you identify the last owner of the mortgage, when you contact them be prepared to show them the full chain of ownership including the last assignment of record showing them, they are the owners.

    This whole thing could likely be resolved by a title agent who knows what they are doing in a week or so.

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  • Jessie Martin
    OP
    Berlin, MD · Member since 2013 · 5 posts · 0 votes
    13y

    Here is the information I have...forget all other banks mentioned as that info was given to us by the seller and may or may not be reliable.

    Chain:
    Deed of Trust 1st Mariner
    04/99 for $333K
    Liber 2683 Folio 415-420

    Deed of Trust Greenpoint Mortgage Funding
    03/03 for $419K
    Liber 3642 Folio 252
    Within this document it states:
    Refinance Deed of Trust at Liber 2683 Folio 415 paid balance of loan $320528.66 leaving $0 balance

    Certificate of Satisfaction Greenpoint Mortgage Funding
    12/03
    Satisfies Liber 3642 Folio 252

    The only other document that we have is a letter from 1st Mariner stating that they sold the loan to Residential Funding Corporation.

    This is all we were able to obtain from the county records. As far as I can surmise from the Title Insurance company, they are saying this is not enough proof that the 1st Mariner lien has been satisfied. I'm assuming this is because there is no Certificate of Satisfaction on record, only the Deed of Trust with Greenpoint stating that the loan with 1st Mariner was paid. They are telling us we need to get the seller to find a cancelled check proving payment of the 1st Mariner loan - which is never going to happen. Does anyone know of another way to prove that this loan has been paid?

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  • Steve Babiak
    Real Estate Investor · Audubon, PA · Member since 2009 · 13k+ posts · 8k+ votes
    13y
    Originally posted by Jessie Martin:
    ... Does anyone know of another way to prove that this loan has been paid?

    My earlier post was short, not a novel like some of the other posts, but it did give some input to this question.

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  • Dion DePaoliPro Member
    Real Estate Broker · Northwest Indiana, IN · Member since 2011 · 2k+ posts · 2k+ votes
    13y

    As Steve simply pointed out, going back to the title company or closing agent who handled the transaction may yield the Satisfaction of Lien/Mortgage for the payoff. If the actual title company as an agent is not around, you might be able to try the actual insuring title company. They would have required the same satisfaction in order to insure the Greenpoint mortgage was in first position.

    If that is not possible, then you have to contact the 1st Mariner successor, which it sounds like you did.

    I suppose you could try and speak to the current Mortgagee or Mortgage Servicer and ask them to try and help you a little. They will want their payoff. The current Mortgage Servicer may have access to the Greenpoint Mortgage file, which should have a copy of the title policy. You can use the policy to call the title insurance company and work through the issue. The alternative would be processing a claim on the title insurance, provided the title policy did not exclude this lien for some reason. In addition, if they have any closing document or similar, that might expose the name of the title agent who handled the transaction, if you need to source them. If that doesn't work, you will have to get paperwork from the seller.

    To a large degree, I think this title company, you are currently using might not be the best fit for this work. It really seems like they don't want to help do their job, which is help clear title. I would talk with the Seller and look into choosing a different title company. In addition, the statement in your last post where you mention the Title company asked for a cancelled check to show payoff for the outstanding lien is a flawed concept.

    A borrower does not send in their own payoff check. That money is sent from the closing agent. The borrower would not have a cancelled check, the borrower didn't write the check. If this is what the title agent really asked for, I would suggest they seem a little incompetent.

    To a large degree this is simply a customer service problem at the title company. They don't want to do any heavy lifting for the closing. Not all title companies are like that, for sure. When the public has clouds on title, they turn to real estate attorneys and title companies to help. Having the common public running around trying to cure clouds on title is an exercise in futility, since they don't deal with this stuff everyday. This is the role of a title company. If you are not getting what you paid for, go somewhere else.

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  • Rick H.
    Lender · Greater LA/Orange County area, CA · Member since 2012 · 3k+ posts · 3k+ votes
    13y

    Are we talking about an investor trying to buy a short sale as an investment or a prospective homeowner trying to buy a property for their own residence, use and enjoyment?

    I ask this question because, after all, this IS an investor forum. If the OP is an investor, I would immediately suggest turning the cards on the seller, effectively saying: 'Hey, you are under contractual obligation to provide clear title. If not, we need to renegotiate the price and terms.'

    Or walk. Hedge funds or not, there are plenty of other fish in the sea if you know where to drop your line and what they're biting on.

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